martha: thank you for being with us today, "studio b" is underway right now with shepard smith. >>shepard: the the news begins anew, trouble for the former presidential candidate accused of using campaign cash to cough up an affair and it will cost millions. >> end of an era, the space shuttle landing for the last time coming to a us from a live report from kennedy space center. and a state making millions selling their own residents' personal information without their knowledge. and lo and behold, it's legal. that's all ahead unless breaking news changes everything. first from fox at 3:00 in new york, a massive investigation underway now to get to the bottom of two mysterious deaths at the home of a millionaire

pharmaceutical tycoon in california. here is what we know: on the 13th of this month the millionaire's six-year-old son, max, fell down the stairs and creditly injured and the millionaire's girlfriend and 13-year-old were the only ones at home at time. four days later as the boy was in a coma, the girlfriend turned up head, hands and feet bound hanging from her neck. staffers say she was sobbing and distraught the day before she died. we're told the millionaire's brother found the body and called the cops. and the millionaire himself is at the hospital with his ex-wife at the time holding vigil at their son's still living bed. he die add few days later. so, two deaths. they are trying to determine if this is a connection. and, whether the girlfriend killed herself or somebody murdered her. police say there are suicide cases in which the person ties his or her own hands to keep the

person from loosening the noose but family members say they simply do not believe she killed her sell. trace with brand new information from our news hundred. if it was suicide, hands bound, feet bound, hanging by a noose from a balcony how did she get into that position? >>trace: we talked to a former san diego detective and he said he first said she would have to get up first and tie her feet and then if she was very, very agile she could then maybe tie the rope and her hands behind her become. if she accomplished all of that, she would then just slide off the balcony, but he says the key here is the rope around her hand. listen. >> i would think one of the critical things is how the knot was tied whether it was a knot or if the rope was just looped or someone's hands or how that

actual knot was tied. that with be pretty difficult to do if it was an actual knot. >>trace: police know exactly how tight the knot was. they are not telling us yet. >>shepard: the girlfriend's family says the police are not talking to them. >>trace: they are frustrate ised. we cared her sister and a man answered and says the night of the incident the san diego sheriff called him that night but since then they have not heard word one. her sister issued a statement saying and i quote, "obviously the investigation is not complete yet but as far as what i know about my sister, my sister did not commit suicide, my sister was not depressed, my sister was not frantic." police said on tuesday they would have a ruling by the end of this week on whether there was suicide or homicide.

it's thursday, stilling in. >>shepard: trace, thank you. it is now time for the disgraced former presidential candidate john edwards to by. the federal election commission unanimously ruling that john edwards must return $2.3 million to the treasury because the 2008 campaign took in too much government money. the one-time senator facing criminal charges and possibly prison time because they accused him of using campaign cash to cover up an affair and a love child while his wife was battling cancer. the fox report's chief correspondent is with us now from new york. jonathan, this doesn't directly relate to the campaign cash that john edwards is accuses of using the mistress? >>jonathan: not directly this is an accounting issue, but substantial accounting issue in the shape of $2 million. a statement sent to us a short time ago from the s.e.c. said

"the commission has an obligation to ensure that candidates who participate in the presidential matching funds program use the public funds consistent with the law and repayment determinations are a tool the commission has to fulfill that obligation." and one describer described this as "just a math problem." but, on the other hand, it adds to the john edwards campaign funding murkyness given the chief accusation he funneled cash in an effort to hide the affair. >>shepard: anything from the john edwards camp? >>jonathan: not a word. but they have previously argued all the federal funds they received were justified and they don't owe a penny. they also referred to the justice department action against john edwards saying that the legal cost of defending that case should be counted as "qualified campaign expenses," that would seem likely to

contest the finding but if they do have to pay back that $2.3 million it would completely delete the campaign account which on june 30th had $3.6 million in cash on hand. john edwards is a very wealthy man worth around $25 million, so this would have in affect on his personal fortune. >>shepard: feel like chatting? than i always feel like chatting. >>shepard: chatting away about this story throughout the hour at foxnews.com/shep, click that and you will see jonathan. you can chat now foxnews.com/shep. weather alert! it's hot. officials say the blistering heat across the country killed two dozen people. excessive heat warnings in effect from the central united states throughout the ohio valley into new england. 31 states in all plus washington, dc, more than half reaching triple digit temperatures this week and it is not over.

our chief meteorologist is live outside our building there it is hot. it is my understanding all this flooding has a lot to do with all the humidity. >> the ground is so saturated across the northern plains you get the heat making it turn into humidity, now, so you are right. a major story, we had such a brutally cold winter and now dealing with the hottest summers on record across the son plains and reaching to the northeast. in new york you have to be in it. you have to walk, be on the subways and today and tomorrow, that is the worst. we have incredible heat across so much of the country right new. we will be continuing to deal with it. wherever you see the dark pink color that is temperatures that are in excess of 110. very, very rough one. >>shepard: when do we expect it to get away? rick: bits of relief on the northern tier but not the

southern tee -- tier and tomorrow the worst is across the northeast, and on friday, you can see the northeast still in excess of 110 and the central part of the country baking. on saturday, you can see the temperatures in the northern plains climbing again. so relief to the northeast by saturday and sunday but the heat moves back into the plains and will likely continue to deal with this pattern of a few days of a break across the north and the heat comes back to the south, no break at all. >>shepard: people in buffalo, new york, not used to this with the average high around 80 in july. but buffalo is the birthplace of the modern air conditioner. a cornell university graduate the first electric unit in 1902. before that folks used fans and ice to keep cool.

after perfecting the invention, he and other engineers left buffalo to start their own company, the carrier corporation, and, later, carrier which still makes cooling systems. our thanks to the greatest reporter today. look at that! steve brown in chicago sent us that story. i like it. it got harder to find a job if you can believe it. a new unemployment numbers. stay tuned.

that is different. so freestyle lite test strips make testing... easy? easy. great. call or click-- we'll send you strips and a meter, free. free is good. freestyle lite test strips. call or click today. >>shepard: more bad news of the job market, the feds say the number of people filing for the first time for claims of unemployment benefits jumped again last week up 10,000 for the week prior to 418,000.

context and perspective that is like everybody in omaha, member filing for the first unemployment check at once ashes sign the economy is having a hard time getting back on track. last month, the unemployment rate rose to 9.2 percent the highest this year and it comes as more companies announce plans to cuts jobs. and now, gerri from fox business network is here. >> the federal reserve issuing a report saying the economy will not grow any time soon. and just this month, cisco and lockheed announcing 6,500 layoffs each. goldman sachs is taking out 1,000. the economists are dialing back on what they thought would happen. they are cutting heads. >>shepard: the dow and the nasdaq is even bigger. the dow is up 1.21 percent. why? >>guest: earning season.

companies are making a lost money and you reported apple made $7 million in a single quarter and a lot of ... billions, billions. so they are making lots of money and you heard on wednesday companies are worried how they can prosper in this environment so they are not hiring. they have lots of cash on balance their balance sheets, and the president is being advised on how to grow jobs. and apple each have $16 billion on their balance sheets and dell has $14 billion. loads and loads and loads of cash they could use to hire people and bring if new products find new cures to illnesses and do a million different things but it is not happening. >>shepard: i understand people are learning to get along with fewer employees and they are more automated than we used to be but it doesn't make sense when you have that cash you do

not want to grow your business. >>guest: they nervous what is going on in the marketplace and worried about regulations and do not know what to expect. the government doesn't know where the next dollar is coming from and they don't think they can pay their bills and europe is falling. am i getting too negative. >>shepard: i was thinking of choosing a new planet. >> nasa, forget it. >>shepard: they laid off there, today. >> terrible. i hate that. >>shepard: a beautiful landing, though. we will watch you on the business network the "willis report" at 5:00 eastern each day which is 4:00 in oxford. we need a new full screen of you. that is weird looking, but it is a little weird. it gives you the power to prosper f business network and if you don't get it demand it. the treasury department reports chrysler repaid the last of the

bailout loans six years ahead of schedule. chrysler, everybody. chrysler, come on now! you will recall in 2009 the government committed $12 billion to the struggling automaker and we are told the treasury recovered all but $1.3 billion and they will not get that back. clap retracted. coming on the heels of strong sales numbers and chrysler reports sales jumped 30 percent in june. chrysler's best month since 2007 and general motors says their sales rose 11 percent when they sold five cars and ford went up 14 percent, they did not take a government bailout. and sold 30 cars. the millionaire c.e.o.'s son died and it is called an accident. the girlfriend died and it is called bizarre and now he has hired a p.r. company.

and the defense team that got casey anthony acquitted did not come cheap and the good people of state state are picking up the tab. the total bill so far is ahead. [ male announcer ] millions of men 45 and older

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>>shepard: people outraged over the casey anthony murder trial are targeting the defense lawyers. the wife of this attorney cheney mason called police saying she is afraid for the family's safety. >> i'm getting a lost threatening phone calls at my home. and i really am trying to get telephone company to cooperate with a drop trace on my line. i would like an officer to respond to i can get something done. >>shepard: one caller told her husband he better sleep with one eye open. we told another referring to casey anthony saying she can run

but she can't hide. and taxpayers got a bill, $150,000 bill from the anthony defense team because when the florida million republican out of cash a judge ruled her case could be state funded but for lawyers' fees. casey anthony left jail on sunday after she was found not guilty of killing her daughter. the millionaire drug company executive arranging funeral services for his girlfriend and his son. as we have reported the two died difficulties apart following a series of unusual incidents at their san diego area mansion. and now the multi-millionaire's c.e.o. who runs a prominent drug company has hired a high profile public relations agency. officials say they believe his son, max, died by accident, when he fell down the steps. officials have not determined whether the girlfriend died of suicide or murder. remember, police say she was handing from a balcony by her neck with her hands and feet

bound. the consultant, a friend of the program, is president of the communications firm emerald partners. so, in comes a p.r. firm. >>guest: it is a grizzly tragic story and this gentleman -- jonah shacknai is well-known and he had to hire a public relations firm. you it is the client down and you say, what did you do? when did you learn about this? what is your background? there are rumors flying around. you try to determine the truth the because like in your case or in my case all you have is your reputation. so, you have to try to get to the truths. and then you have to be aggressive with the media and the firm he hired is well experienced firm, an aggressive firm, and that is what they will try to do. >>shepard: what have they continue so far? >>guest: well, they are learning the facts.

what has happen sod far, you don't know. if you are a public relations person you survey not background. that is the point. what has come out now, is that shacknai was devoted to his son. he doubted on his son. he was devoted to the give. he lived with the girlfriend for they years. in other words what started to come out is this man who is a well-known man, seems to be fine, seems to be all the things you would think are present in an awful situation. that could be the work of these people talking to the media for background off the record behind the scenes. >>shepard: before we got those things, part of the story, and if this is an innocent victim of horrible circumstances you could not feel worse for him his son falls down and thys the girl isd hanging and it is awful but two wives before, the second wife the mother of the child and the

first wife this was domestic violence allegations and a lost stuff happens with people but when stuff like this were whats it comes up. >>guest: this is why it is urgent for somebody like this to talk to a representative who will represent him in the media. shacknai should not talk, should have someone like me talking for him as this firm and say, look, talk to me of your past marriages, about all the worst things that anybody could bring up and give me the answers and then i can represent you publicly with confidence. >>shepard: there must be two goals going on, a personal and a business goal because the business goal has shareholders involved. >>guest: right, very good point. and this is the new york stock exchange company, 700 employees, and the stock was hammered when first announced. it has come back. the company is represented separately with public relations, and you have to reassure investors that the

company is fine, it has nothing to do with it. if he is going to be out, and be distracted, we have bench strength to take care of it. this is the steve jobs concept with apple, we have a bench that can take care of things no matter what happens to the c.e.o. >>shepard: we expect a determination of cause of death or at least manner of death from the police because they are doing some sort of testing in the next few days. nice to see you again. word lawmakers could be close to a deal on our debt limit. time is running out if they do not reach an agreement in the next 11 or 12 days, the federal reserve chairman says the effects would be "catastrophic," but you don't believe that, or a last you don't believe that. >> the space shuttle is history after 30 years, it has made the final stop. >>shepard: we still and not make audio sound right from the

space space shuttle. touching down for the first time after a long-running chant -- chapter of space history. stay tuned.

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nose gear. touchdown. having fired the imagination of a generation a ship like no other, its place in history secured, the space shuttle pulls into port for the last time. it's voyage add an end. >>shepard: that was its. three decades of mission, landing of "atlantis," was the end of a major chapter in our nation's space program. the mission commander noted that "atlantis," is now headed for a museum. >> i want the picture of a young six-year-old boy looking up at a space shuttle in a museum and say, daddy, i want to do something like that when i grow up. or i want our country to do began tass tick things like that for the continued future. >>shepard: just back from space. so now the united states has to rely on the russians to send

american astronauts into orbit. phil keating with the news from kennedy space center. man, tears were flowing this morning, they had to be. phil: absolutely. a full of lot of hugging and men crying and people still weeping a minute ago. i saw people hugging themselves, each other goodbye as they headed home wondering what the future holds for nasa and united states space but at the party today, there was at least a little troop for celebration. >> after 30 years it was a hell of a ride! >> big applause from the nasa co-workers as several thousand showed up as the vehicle processing facility where "atlantis was" was rolled to and people spent two or three years focusing their lives and jobs on that particular shuttle mission. it is so much larger than just a team of astronauts that fly on

board, and the nasa administrator, he was choked up today and he is a former astronaut. i was proud to be part of the program and will carry the cherished memories and experiences with me for the rest of my life. but i'm also ready to get on with the next big challenge. i want to send american astronauts where we have never been before, by focusing our resources on exploration, while leveraging the private sector support to take americans to the international space station. we will do it together. phil: a lot of questions remain as far as federal funding, how soon? do you replace a vehicle for the shuttle? and who much of a private-public partnership will evolve with nasa and other companies and getting humans into space. >>shepard: well, phil, give

them some love. have a great day. thank you, my friend. lawmakers could be close to a deal on raising the nation's debt limit from a senior congressional aide but the white house denies it saying got sides are talking. we are 12 days away from hitting the debt ceiling. if they cannot reach an agreement by then treasury officials say they will have to start deciding which bills to pay and which not to pay. debt interest, medicare, social security, unemployment benefits all in jeopardy. the house speaker john boehner says he is willing to work on a compromise if it does not include tax increases. the white house says ending some tax breaks for the rich has to be part of the deal. and now the assistant managing editor of the "wall street journal" so where are we? >>guest: you could have said that at any point, that is where the republicans are, this is where the democrat is. we are closer to the dave august 2nd so there is movement.

will it be as lunch as obama wants? probably not. as large as the gang of six, the bipartisan committee of senators who came back and initially there was buzz in congress this could be acceptable. but they are having a hard time getting enough signatures on the letter of support. what we may end up with is a short-term arrangement that the president says he is amenable to so long as there are significant cuts on the table. so you might have a situation with the debt limit raised august 2nd to avoid the things you describe, to say nothing of chaos in the global financial markets and there are larger cuts on the table that are going to require legislation you cannot get done by august 2nd and yet the deal is, okay, so long as they are on the table and we are moving down that road we moving to raise the debt ceiling for a short period. >>shepard: here is where we think we are, the house of

representatives speaker boehner and the president discussing a deal $3 trillion in spending cuts over 10 years that would avert the default. the potential agreement would include a promise of tax reform in 2012 so what they will do is cut spending is deal with all of this come 2012. >>guest: that is right. what is 2012? election. after the election. exactly right. so this is a little closer to the deal that went down the road on recommending cuts in entitlements programs but, also, revision in certain taxes, including lowering tax rates for individuals and lowering taxes on corporations but closing loopholes and our recent poll shows that one thing the republicans and the democrats have to be aware of, the public has moved in the direction of a desire to raise the debt ceiling to get beyond this, and that a large number of independent voters are in a camp where they are saying, listen, we understand taxes have to go up,

so, let's get on with it. that is something that will be part of the debate define now and august 2nd. >>shepard: and this poll is not a poll of any particular viewer but a standard poll. if congress fails to raise debt limit is there a financial catastrophe? and 40 percent say yes, and 55 percent say no they exaggerate. what is that? >>guest: a lack of understanding of what we are talking about. >>shepard: we have done a horrible job of explain there if that is what they think. our job is to speak to the best minds in the world on the matters and every single, sometimes boring person i have spoken with, they all say it is over. >>guest: two things at work. >>shepard: how are people so wrong? >>guest: they say is that raise a debt ceiling or get a budget? some may just not be listening and understanding it, and,

actually, there is a third element. that is, of people polled they could be saying, look, this is inconceivable, the government with not go to the brink and then jump over it. and jump into the abyss. they would find a way to resolve this. >>shepard: brand new, just got this, during the last sentence: the white house stressed today that president obama is seeking a deficit cutting agreement that includes some added revenues alongside spending curbs in order to raise the debt ceiling. and i quote, "anyone reporting a $3 trillion deal without revenues is incorrect." that from the white house communications director. he said on twitter today that the president of the united states believes we need a balanced approach including revenues e sometimes when he is out there tweeting something that mean those are doing this but liberal base, did not worry, do not worry liberal base, we

will get your wealthy taxpayers in. they have always maintained that, look, in two zones they want to increase revenues. what does that mean? increased taxes. they want to quote some loopholes and subsidies on corporations that get tax breaks and we are seeing all of the energy company executives come before congress on this. and a second zone, that would be eliminating the bush tax cuts for the wealthy and has always been on the table and something that the republicans have said "for way." >>shepard: if this does not happen there will be no default. >>guest: you saw the bipartisan commission this group of six get to that point. >>shepard: john bussey, thank you, nice to have you. the economy could be limping along but it did not bother an alleged prostitution and drug ring catering to wall street

types. no anything about that? >>guest: not a word. >>shepard: you wait if line at the dmv and the state turns around and sells your personal information! would deliver our next generation mobile broadband experience to 55 million more amecans, many in small towns and rural communities, giving them a new choice. we'll deliver better service, with thousands of new cell sites... f greater access to all the things you want, whenever you want them. it's the at&t network... and what's possible in here is almost impossible to say.

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hour. >> the customers are high end customs coming from the financial markets, hedge fund people, people withing in but money. and willing to pay the enormous amounts of money for god knows what. >>shepard: for a price, clients got cocaine and other drugs. bonus prizes. what is the district attorney saying? >> the operation included using techniques that would hide charges on the personal credit cards. a client would charge the service through cupiddirect.com and it would show charges for moon light production and a code word if you wanted to add cocaine and it was champagne according to investigators the clints would request the bubbly and the response would be if the liquor store is open we will get you some. and seven people and five corporations were named not

indictment outlining prices at $3,600 an hour and according to the d.a. the higher prices were not necessarily for services but for the quality of the it court, prettier girls earned more and the high class new york showed a profit of $7 million over the last three years on its books. >>shepard: and the clients? the ones that were clients, anyone facing charges or just a company? >>guest: most likely nervous millionaires. the brooklyn d.a. is telling f there could be. there is a lot of paperwork to go through. some could be forced to pay fines up to $250, clump -- chump change, really. investigators are still looking for one more office manager who remains at large. they face corruption charges bringing the possibility of 25 years behind bars if convicted.

>>shepard: thank you from new york city. attention florida drivers: the sunshine safety is selling your personal information for tens of millions. wait, they didn't tell you? they don't have to. a number of florida news outlets reporting the state made $60 million over the last year selling driver's names and addresses and birthdates and more. a spokesman for the state department of highway safety can motor vehicle says the practice is legal and that social security numbers and driver's license numbers are not for sale. and now the prosecutor and the criminal defense attorney. really? you can just sell that stuff? it is not like you couldn't find that online with most people, but ... >> it is all on there online. what is the big uproar?

>>shepard: if that is the case why would pay $60 million for that? >>guest: when the government is involved i have a problem. in the 60's and 70's people fought for freedom and government officials, lawyers, citizens, and then we started giving it away, and we are complacent with losing your life, and now we are giving information away on facebook, et cetera, and now the government? this is another extension of the government putting their nose where it should not be and that is giving away our private information. they say as long as it is not used for harassment, but how do you know that down the road it is not used for harassment? >>guest: listen, you are getting crazy. the purpose of the statue, you have someone, whether it is insurance agency or law enforcement, everyone needs that information, if someone is collecting it, tell me why they are collecting it and putting it together and putting the data

collection, why shopped they make money? in this economy, they are doing that work for necessary reasons such as a child is abducted where do the cops go do get the information? >>guest: they are selling it. that is the issue. they are selling it to private corporations. they are selling it to private corporations. >>guest: if i am an insurance agent and you want did cover me but the person does not have a license, do you think it is possible that information is necessary for the insurance company to know? so, selling it because someone will make money in this business? >>guest: we're not talking about them selling it individually but the issue is they are selling it on a mass basis for companies that are using it for their own purpose which is to make money. >>guest: it is insurance agencies, and people who did work, and say the statue has to not be vague. it is vague to say who can get their hands on that so, yes, it needs to be tightly construed but that information does need

to be out there and the person putting it together needs to get paid. >>shepard: under the statute the information cannot be sold to a person who will solicit business such as companies that want you to come do their ice cream store or companies that want you boy their vehicles? >>guest: and what a ludicrous statement. i read that. it is the secondary way that this information is disseminated. the party gets it and they sell it to the second party and necessity lose track. >>guest: so the second party who getting it, who knows if it is a pedophile or pervert that needs to be fixed. whoever is getting the information has a legal obligation if it isening decision seminated it has to go before a judge. but making the money is in the issue. >>guest: let me say defense attorney or prosecutor, one of the biggest problems we have in our system today, criminal justice, i.d. fraud, anything

that accentuates the possibility of that taking place should be shut down because that could be the number one crime in america right now. >>shepard: thank you both, gentleman. the united states has purred -- has poured billions into afghanistan, billions and billions and billions and new word that many of the taxpayer dollars are ending up in the wrong hand. one congressman says millions and millions of dollars a day are stolen or wasted. millions per day. $10 million a day. details ahead.

>>shepard: billions of tax dollars could be ending up in the hands of terrorists. billions. according to a government audit

found that aid money to rebuild afghanistan is getting lost in transit. this report blame as lack of u.s. oversite and corruption in afghanistan that makes it difficult to track the money when it gets there and sights reports that indicate up to $10 million a day in cash money is smuggled away believed to be going to the insurgency. and now from the pentagon, general officer, -- jennifer it sounds sucraid that we did not have it tied up enough, this is real, $10 million a day to the people trying to kill our soldiers? >>guest: well, what is appalling if you look at the efforts that have been put in you remember a couple of months ago it was reported that the international airport there were v.i.p.es showing up at the airport, with suitcases full of millions of dollars. and, so, the united states embassy pressured the karzai

government to ask them to start checking the bags of the v.i.p.'s going through the airports and they started doing so and the victim's starting taking vehicles and driving directly up to the plane and it was so sky office it ok the tarmac they have gone back do not checking the suitcases and the money is being friend out to places like dubai. >> any evidence that the u.s. money is ending up in the hands of the taliban specifically? >>guest: that certainly is the implication in the report. they do not give specific examples but the special inspector jennifer afghanistan points out this money because they are not tracking the serial numbers of the dollars being used to pay off contractors, that the money is not being tracked. here is a quote from the report. the united states poured billions of aid into a country plagued by corruption and it is essential we use all available tools to assure the dollar are

protected from fraud. but a problem is the embassy was placing structurery -- treasury officials at the bank but they stopped because it was hostile and the karzai government did not allow officials to see what was going on so, again, we are back at square one, they are not observing what is happening with the money and 90 percent of the money in g.d.p. is u.s. aid money. >>shepard: and the other part is selling heroin. >>guest: essentially. >>shepard: rise of freedom, a look inside what will be the 9/11 museum, the location is beneath the memorial which opened september 11th scheduled to open in another year but taking place, and the director gave our team an early tour pointing out the large artifacts now if place like the survivor's staircase there.

the last original portion of the world trade center that crews removed after the attack. >> hundreds survived running down this staircase and we have been able to place the stares in the now seem as you make your dissent so that all of us can claim that we're survivors of lend in the sense, the broad sense, that we all live in the post 9/11 world. >>shepard: our series conditions tonight, a special report on fox report.

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